Lehigh-Northampton Airport Authority seeking up to $8 million line of credit

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The Lehigh-Northampton Airport Authority is seeking a $6 million to $8 million line of credit that could be used to make their final court debt payment if the authority can't close on its land sale for a FedEx Ground plant in time.

The Lehigh-Northampton Airport Authority is seeking a $6 million to $8 million line of credit that could be used to make their final court debt payment if the authority can't close on its land sale for a FedEx Ground plant in time. (Morning Call file photo)

The Lehigh-Northampton Airport Authority seeking up to $8 million line of credit

Facing pretty big bills, the Lehigh-Northampton Airport Authority is set to do what millions of American families have done — get itself a credit card.

With a $7.6 million debt payment coming by year's end, and no certainty of raising the money in time, the authority is set to apply for a $6 million to $8 million line of credit, Authority Executive Director Charles Everett Jr. said. And like many families, Everett is hoping the authority never has to use it.

The credit line plan comes as the authority's $9.9 million land sale continues with a New York City developer planning to build a FedEx Ground distribution center on airport land in Allen Township. A tentative agreement was struck last July, but closing the sale has been delayed while details of road improvements for the $335 million plant are hashed out.

The authority is selling the land to raise money for the final payment on a $26 million court judgment for taking a developer's land in the 1990s. The Rockefeller Group is buying 260 acres north of the main airport, but there's no date on closing the deal, creating concern about getting money for that last payment.

"I wouldn't say we're worried, but we are trying to get a contingency plan in place in the event the money doesn't come soon enough," Everett said.

Everett said he's confident the FedEx deal will close this year, and probably in time to beat the Dec. 1 deadline for making the court debt payment. But he said it would be irresponsible to allow the authority to be caught flat-footed.

Lehigh Valley International Airport holds an open house. The meeting, open to the public, was held to give people a chance to question officials.

Lehigh Valley International Airport holds an open house. The meeting, open to the public, was held to give people a chance to question officials.

Everett said the authority is weighing options at three banks — BB&T bank, TD Bank and Peoples Security Bank — and a credit line is expected to be secured in February.

"We thought we'd have that agreement in December and it's a process that's taking a little longer than expected," he said. "It could happen any day."

Everett said he was not sure what fees a line of credit would carry, but it would be designed to be used only for the debt payment, and not other capital projects.

The line of credit could be a short-term fix that could lead to a refinancing of the authority's $45 million in bond debt, Everett said. That likely would be expanded later to pay for capital projects put on hold while the authority has paid its court debt the past three years.

Morning Call file photo

The Lehigh-Northampton Airport Authority is seeking a $6 million to $8 million line of credit that could be used to make their final court debt payment.

The Lehigh-Northampton Airport Authority is seeking a $6 million to $8 million line of credit that could be used to make their final court debt payment. (Morning Call file photo)

A line of credit can have an adverse affect on a public entity's credit rating, making such a bond refinancing more expensive, but given the authority's lack of cash flow, this one might have a positive affect, said Alan Schankel, managing director, municipal bond strategist for Janney Capital Markets, Philadelphia.

"Its gives them a little stability that at the end of the day would be positive," Schankel said. "But if the sale didn't go through, then we'd be talking about something else. Then they'd have problems."